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Asset prices are composed of many things. Political clarity reduces one component, namely one kind of uncertainty. Uncertainty makes the computed asset price mo
by Arnt 8y ago
Asset prices are composed of many things. Political clarity reduces one component, namely one kind of uncertainty. Uncertainty makes the computed asset price more uncertain. If a given asset is expected to have a value of £1m±10% in a year, reducing uncertainty makes the expected value £1m±5%.
Uncertaintly doesn't affect the headline number directly, but it does affect the ± part of the price price and complicate planning, and the reduced ability to plan may indirectly affect the headline number.
- logifail 8y agoThe OP wasn't talking about asset prices, but asset price movements. That's awfully close to suggesting that one could predict the future price of assets, if only it wasn't for this pesky "political instability". Surely not?
- Arnt 8y agoAsset price movements are basically x-y, where x and y are asset prices at two different times. If the uncertainty of x and y grows, then that of x-y grows even more.